...Rating Linkages: Dayton Power & Light Company (DP&L) is a relatively low-risk regulated utility; however, its ratings are constrained by its ownership by a weak parent, DPL, Inc. (DPL), and lack of explicit ring-fencing provisions in Ohio's regulatory construct. Fitch Ratings currently has a three-notch separation between the Issuer Default Ratings (IDRs) of DP&L and DPL. Any further downgrade of DPL's ratings could result in commensurate downgrade for DP&L. Corporate Separation Plan: The Public Utility Commission of Ohio (PUCO) approved a generation separation plan that will temporarily increase DP&L's leverage. The separation is required by Ohio legislation. The PUCO order allows DP&L to maintain debt equal to the higher of $750 million or 75% of its rate base until Jan. 1, 2018. DP&L's leverage as of March 31, 2015, was $877 million. DP&L's return to its normal regulatory capital structure by Jan. 1, 2018, in Fitch's opinion, will be challenging without regulatory support. Regulatory...
